Seoul Lost 5.5% On A Casino Remark And A Chinese Memory Chip

South Korea's main stock index closed down 5.5% on Tuesday after the head of Broadcom told a conference in Singapore that many investors in artificial intelligence are behaving like gamblers, and after reports that a Chinese company is closing in on the memory chips Samsung and SK hynix sell. Bond yields and oil fell, and gold rose. Hours later the International Monetary Fund raised its global growth forecast for this year on the strength of spending on artificial intelligence, and named a loss of faith in that spending as one of the largest risks to it.

Fast Facts

• Earnings per share across the S&P 500, meaning each company's profit divided by its shares, are expected to grow about 29% from the same quarter of 2025, with Micron Technology and Nvidia alone supplying more than a third of that growth (Read More)
• Microsoft unveiled Maia 300, a chip it designed itself, and said it will start installing it in 2027 to run Microsoft's own artificial-intelligence products (Read More)
• Dating-app company Bumble is in advanced talks to go private at a valuation of $1 billion (Read More)
• Albertsons is asking Kroger for $8 billion ahead of a trial, saying its rival sank the merger the two chains abandoned (Read More)
• Tesla's driverless taxis face fresh scrutiny from federal auto-safety regulators over a claim that one of them sped in a school zone (Read More)
• Enforcement against "AI washing", where a small company rebrands around artificial intelligence on deals nobody can verify, has gone quiet at the Securities and Exchange Commission (Read More)

Global News

• A record number of Chinese brands, BYD, Xpeng and Zeekr among them, joined the more than 200 exhibitors at the Paris Motor Show that opened Monday, as the EU announced a deal with China to limit hybrid imports (Read More)
• BMW delivered 6.3% fewer vehicles in the third quarter than a year earlier, which the company put down to the slowdown in China (Read More)
• Megan Greene, who votes on Bank of England interest rates, said British rates may not yet be high enough to pull inflation back to the bank's target (Read More)
• European natural-gas prices reached their highest level since December 2022 on worries about supply through the winter (Read More)

A Casino Remark And A Chinese Memory Chip Took 5.5% Off South Korea's Stock Market

Hock Tan, chief executive of the American chip designer Broadcom, told a conference in Singapore on Monday that "a lot of investors have no clue what they are investing in" and that investors "are in a casino." Separately, reports said China's ChangXin Memory Technologies had made progress on a denser design for DRAM, the working memory inside phones, laptops and data-center servers, and was aiming at a data-center product by year end. South Korea's Kospi index closed down 5.5% at 6,035.35, having fallen more than 6% at one point, with SK hynix off 10% and Samsung Electronics more than 7% lower. In Tokyo, back from a holiday, the Nikkei 225 closed down 1.8% and the memory maker Kioxia fell about 13%.

The money leaving chip shares went where it usually goes. The 10-year Treasury note's yield, the annual return for lending to the U.S. government for a decade, fell about five basis points, meaning five hundredths of a percentage point, from the 5.24% the Treasury published for Friday, October 9. West Texas Intermediate crude was down 1.6% at $92.20 a barrel and Brent down 1.4% at $105.21 in European trade, and gold rose about 0.4%.

What was repriced on Tuesday was not demand for these chips. It was who keeps the profit on them. Memory is where a new competitor is felt fastest, because one maker's chips substitute for another's almost exactly, so a credible third supplier shows up in the price rather than in the order book. Tan pointed at a different limit, arguing that what constrains the build-out of artificial intelligence is access to money rather than the supply of chips. And a Korean trading session reaches an American index by arithmetic, because analysts expect artificial-intelligence infrastructure companies to supply more than half of the S&P 500's profit growth this quarter.

The reports are still reports. ChangXin has confirmed nothing, no originating source is named, and the same gap was visible a day earlier, when a version of the story moved Micron by about 2%. Demand is not in question either, with Nvidia's revenue having more than doubled to $96 billion in its second quarter. "China continues to narrow the competitive gap with US companies," said Chris Weston of the brokerage Pepperstone, and the clearest sign that investors read Tuesday that way was not the Korean selling. It was Hong Kong's Hang Seng closing up 0.3% and the Shanghai Composite up 0.1% on the same news.

Sources: France 24 · Investing.com · Axios · U.S. Treasury · Rapunzl on the ChangXin Memory reports

The IMF Raised Its Growth Forecast On AI Spending, Then Named An AI Reversal As A Top Risk

The International Monetary Fund published its World Economic Outlook from Bangkok on Tuesday, ahead of its annual meetings with the World Bank, raising its forecast for global growth in 2026 to 3.1% from the 3.0% it expected in July. That is still below the 3.5% the world economy managed last year. The upgrade came mostly from investment in artificial intelligence, and the fund singled out the countries that export the hardware: South Korea, Malaysia, Mexico and Thailand. "The global economy has been resilient, but that resilience is reaching its limits," said Silvana Tenreyro, the fund's chief economist.

Then it costed the other side of the bet. Faster adoption of the technology could add 0.6% to global output by 2029. If the productivity gains do not arrive and investment falls away sharply, U.S. output drops 0.8% on its own and Asian technology exporters lose as much as 0.4% of theirs by 2028; add tighter lending conditions and higher bond yields, and global output comes in 1.1% lower by 2028. That is one question asked in two registers, because the countries the fund credited for its upgrade were the ones whose markets fell hardest on the day it landed. The fund also showed how narrow world growth has become: 32 countries now account for 95% of it, down from 54 in April.

The war in the Middle East sits underneath all of it. The forecast assumes crude averages $96 a barrel this year and that the Strait of Hormuz reopens in March 2027, and without the measures governments took to cushion the oil shock, Petya Koeva Brooks of the fund said, growth this year would have been 2.5% rather than 3.1%. The cost falls hardest on the countries that sell the oil: Saudi Arabia's economy is now expected to shrink 3.3% this year, against the 1.7% of growth forecast in July, with Kuwait down 16.7%. Its warning to everyone else was about debt: rich-country governments have borrowed enough that the fund sees a real risk of their own borrowing costs rising sharply.

Sources: Reuters via Investing.com · France 24 · Rapunzl on borrowing to buy AI chips

The Nobel In Economics Went To Two Americans For Work On Holding An Economy Steady

Robert E. Hall of Stanford University and Michael Woodford of Columbia University won the 2026 Nobel Prize in economics on Monday, the Royal Swedish Academy of Sciences said, for research on how policymakers can keep an economy steady. For decades the working assumption was a trade-off: accept higher inflation and get lower unemployment, or the reverse. The 1970s broke it, when prices and joblessness climbed together. "The solution by Robert Hall and Michael Woodford was to build a new framework ground up," said Timo Boppart of the prize committee. Hall, who chaired the committee that dates American recessions for 46 years, showed in a 1978 paper that what people spend today depends on what they expect to earn later. Woodford's work, which came together in a 2003 book, connected the pricing decisions companies make to inflation and to what a central bank does.

Their ideas are the ones a central bank uses every month, which keeps this from being a history award. Expectations are the mechanism: when companies and households believe prices will keep rising, they set wages and prices as though they will, and the belief does much of the work. That is why a central bank now explains what it intends to do rather than only acting, and why a published forecast counts as a tool. Woodford, who called into Monday's press conference and said he was "elated," pointed to 2008 as the test, when rates were cut to near zero and the economy still would not move. Asked about the threat to the world economy now, he said the conflict in the Middle East has disrupted energy markets well beyond the region, which is the shock the fund spent Tuesday pricing.

Sources: Axios · NPR · The Economist

What To Watch

The largest U.S. banks open third-quarter earnings season on Tuesday and Wednesday, and the figures below are analysts' average estimates, which are expectations rather than results. JPMorgan Chase, Goldman Sachs, Wells Fargo and Citigroup are expected before Tuesday's opening bell, with Johnson & Johnson and UnitedHealth. The estimates have JPMorgan at $5.94 a share against $5.07 a year earlier, Goldman Sachs at $12.90 against $12.25 and Citigroup at $2.66 against $2.24. Bank of America, Morgan Stanley and BlackRock follow Wednesday.

Wednesday is the week's data day. September consumer prices arrive at 8:30am ET, one of the last major readings before the Federal Reserve's October 27 and 28 meeting, and the Fed's Beige Book, its survey of business conditions across the twelve Fed districts, follows at 2:00pm. Producer prices land Thursday and import and export prices on Friday.

Chips get their own test. ASML, which builds the machines that make advanced chips, reports in Amsterdam before Wednesday's open with an estimate of $12.47 a share against $6.41 a year earlier, and Taiwan Semiconductor Manufacturing, which builds the chips Nvidia and Apple design, is expected Thursday at $4.45 against $2.92.

Michelle Bowman, the Fed's vice chair for supervision, speaks twice in Bangkok on Wednesday, and Chair Kevin Warsh appears with the fund's managing director, Kristalina Georgieva, on Thursday. Gross domestic product figures are due October 29.

The Classroom Takeaway

A remark at a conference and an unconfirmed report about a rival's product took 5.5% off a national stock index in one session, and nothing those companies actually make changed on Tuesday. Only what investors expected it to earn did, which is the kind of move worth watching happen in a stock market simulator rather than reading about afterwards.